Stock Rally May Slow Reform, Dinallo Frets

The stock market rally may kill the political will to make needed reforms to the financial system, New York's outgoing insurance commission says.
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Outgoing New York State Insurance Superintendant Eric Dinallo expressed concern that the stock market rally may kill the political will to make needed reforms to the financial system.

"I'm a little concerned that because the markets have picked up and the crisis -- some people think the crisis has abated a bit -- that we're wasting a good crisis a little bit: that there are deeper changes that the federal government should consider," Dinallo told

CNBC

Monday.

Dinallo believes the 1999 repeal of provisions of the Glass-Steagall Act of 1933, which prevented bank holding companies from being in other financial business like insurance and investment banking, contributed to the conditions that brought about the current crisis. The absence of Glass-Steagall restrictions allowed companies as different as

Citigroup

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,

Goldman Sachs

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,

AIG

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and

General Electric

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to be in many of the same businesses.

"Too big to fail means too big to manage -- which arguably means too big to regulate," Dinallo said.

Dinallo is stepping down from his position next month to join the faculty at New York University, though he is widely seen as having higher political ambitions.